The Icelandic parliament has agreed changes to the law on pension funds that will see the minimum weight of domestic assets lowered in stages from 50 per cent to an expected 35 per cent of assets.

On 1 January 2024, the minimum level of domestic assets in a pension fund portfolio will decrease by 1.5 percentage points to 48.5 per cent.

This 1.5 percentage point reduction in will take place on 1 January each year until 2027.

After 1 January 2027, the annual decrease in the minimum level of domestic assets for pension funds will be 1 percentage point on 1 January each year until it reaches 35 per cent on 1 January 2036.

Parliament also agreed that pension funds were not obliged to sell foreign assets if they exceed the maximum set out in law due to changes in the exchange rate of the Icelandic króna or price increases on foreign property markets.

In those cases, pension funds will not be allowed to increase foreign assets or currency risk.

Furthermore, from 1 April 2023, pension funds have been required to provide new members with information on the main rights they accrue upon payment of premiums, alongside information on the structure and policy of the pension fund.

Pension funds are permitted to publish a statement to members on a website where electronic member identification is required.

“The pension funds welcome these changes and especially the authorisation to publish statements electronically and the increased authorisations for foreign investments,” the Icelandic General Pension Fund (Almenni) stated.

“Until now, the pension funds have been obliged to send statements to fund members twice a year in paper form.

“Today, most funds offer access to information about credits, rights and movements on locked member websites that are easy to connect to.

“There are also indications that paper summaries are read by few people and even that envelopes are not opened in many cases. It should be emphasised that those fund members who wish to continue receiving paper statements sent home can request it and have them sent to them free of charge.

“The pension funds welcome the fact that sources for foreign investments will increase in the future.

“With foreign investments, the funds can increase risk diversification by investing in many countries with different economic risks.

“Global asset diversification is one of the prerequisites for reducing fluctuations in asset returns and avoiding negative economic effects during recessions or when the population begins to age.”

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